Carnival's stock is slowly trying to get back most of what it had lost in value in 2020, but is it a buy right now at its current low prices? Well, to answer that, you need to take a deeper look into its business and analyze what its investment potential is at the moment- and that is what this page provides. Hopefully, after reading, it'll help you decide whether you should buy Carnival stock in 2021 or not.
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Learn How to Buy Carnival Stocks in 3 Easy Steps
Find a broker
The first thing you need to do to trade Carnival stocks is open a trading account with a well-regulated broker. The broker will provide you the platform to access the Carnival shares as well as other stocks.
Analyze Carnival chart
From your trading account, you'll find a charting application to visualize and analyze Carnival's price movements. This will be necessary for marking your entry and exit point.
After conducting your analysis, place your order and monitor how your trade goes.
Carnival Company Overview
Carnival Corporation & plc is the world's largest cruise operator with a fleet of over 100 vessels across nine different cruise line brands. It sells cruises through travel agents and tour operators primarily for the North American, Australian, European, and Asian markets. The company serves more than tens of million passengers annually.
Carnival is a dual-listed company wherein its US-based Carnival Corporation, and UK-based Carnival plc are combined and function as a single economic enterprise. Carnival Corporation trades in the New York Stock Exchange (NYSE), and Carnival plc trades in the London Stock Exchange (LSE).
The company's headquarters are in Miami, Florida, and its CEO and President is Arnold W. Donald.
Carnival Business Model and Revenue Streams
Carnival gleans revenue primarily from ticket sales of its portfolio of cruise line brands, namely Carnival Cruise Line, Princess Cruises, Holland America Line, P&O Cruises (Australia), Seabourn, Costa Cruises, AIDA Cruises, P&O Cruises (UK), and Cunard.
Generally, the company generates about 62% of its total revenue from ticket sales while the remaining 38% is derived from onboard purchases, like beverage sales, internet, casino gaming, spas, shore excursions, specialty restaurants, retail sales, art sales, laundry, and photo sales. It could also be important to note that a small portion of Carnival's revenue may come from port destinations and other services.
History of Carnival
Carnival was founded in 1972 by Israeli-American entrepreneur Micky Arison. The company grew steadily in the decade and announced and completed its initial public offering on the New York Stock Exchange in 1987. Carnival raised $400 million in its IPO.
The capital became the fuel for the company to pursue acquisitions wherein it was able to purchase Holland America Line, Windstar Cruises, Westours, Seabourn Cruise Line, Costa Cruises, and Cunard Line between 1989 and 1999.
Through a combination of Carnival Corporation and P&O Princess Cruises (which included Princess Cruises, P&O Cruises, AIDA Cruises, P&O Cruises Australia, and tour operator Princess Tours), the first global cruise company was created in 2000.
In 2003, following Carnival's acquisition of P&O Princess Cruises plc, the two companies merged into one entity. In 2009, the company opened its Simulator Maritime Training (CSMART) in Almere, Netherlands. CSMART is a maritime training center that offers advanced simulator equipment, technology, and instructional tools.
Carnival, along with the China Investment Corporation and the China Shipbuilding Corporation, entered a joint venture in 2015 to form CSSC Carnival Cruise Shipping, a cruise line that was scheduled to begin operations in 2019.
In 2018, Carnival announced the acquisition of the narrow-gauge railroad White Pass and Yukon Route from TWC Enterprises limited for $290 million.
And after years of reporting billions of dollars in net income, the company faced its most cataclysmic year last year, forcing them to post over $10 billion in losses. Its stock price declined by approximately 57% in 2020.
Brokers That Offer Carnival Shares
To help you choose the right broker to open an account with, we've reviewed several brands and narrowed down our top choices to the list below. We've come to conclude that these brokers have the best support and trading tools that will help you achieve a great trading experience.
Should I Invest in Carnival Stock?
Carnival's stock has made a gradual effort to erase its March 2020 losses. It had already appreciated by at least 269% from its steep dive between March and April, but it still has a long way to go before it reaches pre-2020 prices.
For the most part, the stock's modest rebound springs from the world's vaccination campaign against COVID-19 that is putting a dent in global infections. The reason why Carnival is such an attractive stock is because of its relative cheapness that when everything opens up again, it may be hard to get the stock back at its current price, which is still near 2011 levels.
Carnival Stock Investment Potential
Carnival's peak price was in 2018 when it reached $72.70 a share while before 2020, the stock grew at a moderate 4.73% annually. At its current price of $28.46, some analysts believe it to be above its fair value, which is below $20. The highest price target for the company is $31 a share.
On the other hand, technicals are a little more optimistic about the stock, projecting a strong buy signal across several indicators on its daily prices. Both the 100 and 200-day moving averages are trading below its price, and the MACD is presently showing bullish momentum.
What Kinds of Investors Should Include Carnival in Their Portfolios?
Carnival is a company with fairly steady growth. From 2000 to 2019, its net margin was only under 10% in the years 2012, 2013, and 2014. It is also a regular dividend payer, and before it halted payments in 2020, Carnival shareholders received $0.50 a share each quarter in 2019. And, as mentioned, its stock has been appreciating at a modest pace before the pandemic wreaked havoc on its business.
Therefore, the inclusion of Carnival in an investor's portfolio signifies a bet on the company exhibiting the same steady growth that it once had once the pandemic is over. That is if things go back to the way it was.
The thing to watch out for would-be investors is how the company will navigate 2021 with its fleet of vessels not back at full capacity. How it plans to manage its long-term debt that has exploded to $23.4 billion last year, while its cost-reduction measures should also be examined more closely.
How Much Should I Invest in Carnival
As with any investment, the amount you choose to invest will depend on you. You know what Carnival's stock price is, and you have a set budget for an initial purchase, so the total amount that will be exposed to this company is possibly something you have already thought about, more or less.
Still, what you can consider that is of great consequence is what your risk tolerance is. It's always a good rule of thumb to use risk capital, especially when you're trading or, in other words, an investment sum that you can afford to lose.
The reason why this should be the case is to be prepared in case things don't go as planned. It also allows you to value diversification, which helps in balancing the risk in your portfolio.
How to Buy Shares in Carnival Stock?
As mentioned, you need a brokerage account to start trading Carnival shares. This process will require you to fill out an online application form from your broker's website. You may also need to submit supporting documents so brokers can verify your account. This process may take a few business days.
After your account is approved, your broker will notify you and instruct you to proceed with the next phase of the process: funding. Brokers typically offer these methods: electronic bank deposits, wire transfers, check, and account transfers from another firm.
If you're in a hurry to trade, the quickest funding option is electronic bank deposits, which take just a few minutes. If you don't mind the time, the other options may need a minimum of 24 hours to process your request.
Lastly, when your deposit shows up in your trading balance, you can then place your first Carnival trade.
Buy Carnival Shares Using a Broker
When you open an account with a broker, your application will have to undergo a verification process. Your broker checks the application form you submitted along with your supporting document or identity proof, e.g., Tax Identification Number (TIN), Social Security Number (SSN), passport, or driver's license).
Brokers need these details from you because they are only complying with anti-money laundering policies. They are also trying to ensure that you fit the age and sometimes citizenship criteria for legal purposes.
Aside from these, brokers may request you disclose information about your annual income and net worth. They may even ask you to provide your investment objectives, risk tolerance, employment status, and occupation. Again, this is essential for them to adhere to various rules and regulations, which may also include anti-money laundering policies, anti-terrorist financing requirements, tax laws, and record-keeping procedures.
Buy Carnival Shares With a Direct Stock Purchase Plan (DSPP)
One other way to purchase shares is through a Direct Stock Purchase Plan or DSPP. This method doesn't require you to open an account with a broker because you'll be buying the stocks straight from the company.
This offers an advantage in fee reduction since you'll no longer have to pay a commission per trade. However, the downside of using a DSPP is that you have to pay an initial setup fee and shell out the company's initial investment amount. There is also a maximum amount that you can buy, and any subsequent purchase would still be made through a broker.
Carnival offers a Dividend Reinvestment Plan or DRIP, which is essentially the same as DSPP. The only difference is that cash dividends you receive are invested into new shares of Carnival automatically.
Frequently Asked Questions
The stock is promising an early stage rebound amid a global decline in infections. If infections decline further during the next few months, a purchase now in the first quarter of 2021 is an opportunity to capture share prices at depressed levels.
Prior to 2020, Carnival Corporation & plc was a consistently profitable company. The pandemic-related lockdowns and travel restrictions from last year devastated the company's business.
Carnival has sufficient daily volatility and trading volume to allow short-term trading profits.
The platform best for trading Carnival stock should offer a wide range of technical analysis tools to have a comprehensive picture of its stock price movements.
Carnival follows U.S. trading hours (9:30 am to 4 pm ET) and London market trading hours (3 am to 11 am ET).
Carnival is listed on the New York Stock Exchange (NYSE) and London Stock Exchange (LSE).